China: Full Steam Ahead

Welcome back to Trading Tutors! Although often tiring, I feel blessed with the opportunity to travel to far corners of the world, analyzing opportunities and assessing their impact on the global financial ferris-wheel. This time, I was lucky enough to spend the majority of the past week in China, attending a well regarded international investment expo in Shanghai, with the aim of assessing just how strong the Chinese investment beast remains. And believe me, its alive and well, a whole generation of the young and rich, all looking for the best ways to make their newly acquired fortunes work in their favour.

What struck me as rather unique, were the motives behind their investment, the cultural values driving decisions and an often, the rather blatant disregard for instant yield, so much as the opportunity for an alternative lifestyle, either for themselves or their children. Such an approach was rather different to what we have become accustomed to in Western nations, where income and capital growth remain paramount to perceived investment success.

Attending the expo were a range of vendors, ranging from investment funds out of Cypress, to real estate developers from Australia and everything in between. Everyone was trying to grasp the attention of China’s young rich, with flashy brochures, investment models and rather expensive giveaways all to entice the attention of Chinese investors. I actually gave an interview for Shanghai’s largest local news network, discussing the relationship between motivations behind potential investors and those offering investment opportunities. During my assessment of the immediate environment, it seemed there was perhaps a slight disconnect between the wants of the average Chinese investor and the motives of the potential seller. A paradigm shift which has taken place in the minds of Chinese investors, which hasn’t quite ‘clicked’ in the minds of international vendors. You see, we’ve been conditioned to provide value through the eyes of financial modeling. A return on our dollars, being the pinnacle in investment success. But it appears that such an offering in most cases, was not the number one priority for China’s young and wealthy. Rather, what many of these potential buyers were looking for, was a lifestyle approach -personal wellbeing for themselves and their families. An escape from the pollution and overcrowding of Chinese cities, to a more relaxed, developed culture with quality of life for their children, alongside a well-rounded education being at the forefront of their success. When asking one such Chinese millionaire what it was they were looking to achieve through their attendance at the expo, the man replied: “An apartment near Harvard, as my daughter will be attending University there”. Ok, I thought, that sounds fair enough. As the conversation progressed, I learned that the man’s daughter was only six years old, yet his plans for her future life and education were already clearly laid out. And such is the way for many of China’s wealthy, as they look for a life for their children, to break out of China’s industrialising mold. A life away from the factories and primary level production, to one of prosperity and success, held in the eyes of their parents.

China Remains In The Spotlight

China is in a unique position in today’s globalised world. Their reliance on raw materials remains clear, as they continue as Australia’s major export partner of Iron Ore and Coal, as well as recently becoming New Zealand’s largest trading partner, exerting dominance over Australia as the largest buyer of NZ goods and services. But China has the unique ability to add value. To leverage their success in manufacturing and production, to continue to create more billionaires than any other nation on this planet. Yet, as we seek to further our financial position, achieving our own version of ‘success’, China’s wealthy clearly have their own ideas of what constitutes a successful life. Thinking ahead, searching for a life for their children, spanning to all corners of the globe and serving as a stark reminder of exactly what we take for granted.

Next time you step out into your back yard, or head to the beach in the sun, think about what every single one of us takes for granted. A life free from health burdens, a race for financial freedom and a future we already know that our children have every chance of enjoying. Priorities are what we make them and success is not always tied to furthering our financial position. More importantly, success should be defined within ensuring we never take for granted the life we have been fortunate enough to live, and the places we call home.